Miller: Texas’s Bold Plan Linking Funding to Academic Outcomes Should Yield Big Gains for Students, Especially Those at Risk

They say everything’s bigger in Texas. It may be cliché, but state policymakers are finding new ways for it to ring true. The Texas Commission on Public School Finance recently recommended investing $800 million more annually in college readiness and third-grade reading proficiency. This is one of the biggest and boldest moves into outcomes-based funding in the country. And it’s likely to yield significant improvements for students in Texas, with even larger increases for the state’s at-risk students.

Texas has years of experience linking public-sector outcomes with public funding. In 2013, the 83rd Texas Legislature enacted a policy in which state community colleges receive additional funding for each student who achieves a “success point,” such as grade completion. Today, 10 percent of community college funding in Texas is outcomes-based. For technical colleges, 88 percent of the budget is based on student outcomes. The Texas Association of Community Colleges has supported these policies and advocated for their expansion.

Texas is not alone in its desire to make new funding for primary and secondary students conditional on student outcomes. In recent years, Arizona, Ohio and New Hampshire have implemented similar policies. And in my home state of Florida, the Early Learning Performance Funding Project provides additional resources to early child care providers and has improved academic outcomes for at-risk students by 23 percent so far.

Over the past decade, I have examined the research and experience with states implementing outcomes-based funding in public education. I’ve also lived under this policy as dean of the School of Education at Florida Southwestern State College, a public college partly funded on its outcomes. As a direct result of the policy, administrative behaviors changed, a greater investment in our advising staff was made and our graduation rate increased by 15 percent, with even bigger gains for our low-­income students and students of color.

Both my personal experience and the academic evidence strongly suggest that outcomes-based funding can result in significant student gains. The key is whether the system is properly designed. Texas’s proposal is just that.

Districts will receive at least $1,450 for each student proficient in third-grade reading. If the student comes from a low-income family, the district will receive $3,400. That’s a 24 percent increase to base funding for literacy instruction that will become a permanent component of the overall system. That’s significantly above the 10 to 15 percent shown to influence behavior and positively impact outcomes in the modeling tool I developed for ExcelinEd.

These reading standards do not have to depend solely on a standardized test — states can effectively link funding to various measures of whether a student has mastered skills, but they must be rigorous and not subject to manipulation.

Texas’s proposal includes a similar funding model for high school seniors who graduate without the need for postsecondary remediation and enroll in a postsecondary institution, achieve an industry-accepted certificate or enlist in the military.

But perhaps the most beneficial element of this proposal is the size of the weights for at-risk students, which are used for allocating additional funding above base funding levels to categories of students who are shown to cost more to educate to state standards. For both third-grade proficiency and postsecondary success, the Texas proposal includes more than 200 percent additional funding for successful at-risk students — almost 10 times the 22 percent typically spent by states on these students. Such a generous weight actually encourages districts to recruit and retain these otherwise difficult-to-reach student populations.

This proposal is expected to increase the level of student achievement in Texas across all students, not just those at risk, and to narrow the achievement gap between at-risk students and those from more affluent backgrounds.

Across states, there is a growing interest in funding the outcomes of education, as opposed to the inputs. It is more sensible to pay for what really matters: student performance and success, not seat time. There is broad agreement that linking payment to performance creates an incentive for better performance, and in fact, this has happened in higher education and other industries throughout the nation.

But nowhere else in the country has outcomes-based funding yet been integrated so thoroughly into the funding formula of a state’s public K-12 education system. The future looks bright for the children of Texas. Let’s hope the rest of the nation is watching.

Dr. Larry Miller is dean of the School of Education, Charter Schools and the Accelerated Pathways Program at Florida SouthWestern State College. He holds appointments as a research affiliate at the University of Washington’s Center on Reinventing Public Education (CRPE) and Georgetown University’s Edunomics Lab.

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